The following yields were reported for Treasury securities on May 12, 2008:
-Refer to the information above. Calculate the implied annualized inflation rate over the next five years.
A)-3.73%
B)+2.28%
C)+1.47%
D)none of the above

Question

The following yields were reported for Treasury securities on May 12, 2008: 
-Refer to the information above. Calculate the implied annualized inflation rate over the next five years.
A)-3.73% 
B)+2.28% 
C)+1.47% 
D)none of the above

Quizplus · Accepted Answer

The implied annualized inflation rate is calculated using the formula for the difference between nominal and real interest rates. The given rate of +2.28% is the correct calculation based on the provided data.

The Following Yields Were Reported for Treasury Securities on May